Namcor: Former board was in the dark over Mulunga’s N$8 billion Angola oil deal

The former Namcor board gave managing director (MD) Immanuel Mulunga sweeping powers to tie the government into an Angolan petroleum deal set to cost taxpayers around N$8 billion.

Mulunga was fired on Thursday after being implicated in another case involving over N$50 million.

Before his dismissal, documents showed that the National Petroleum Corporation of Namibia (Namcor) board was shocked about the Angolan transaction.

These details are contained in a judgement dated 7 August, which found Mulunga not guilty for his role in a controversial oil transaction that was flagged by the board last year.

This transaction led to Mulunga’s suspension last year.

The disciplinary hearing took place from 21 November 2023 and continued this year, led by retired Supreme Court judge of appeal Gerhard Maritz.

“In the result, my determination in these disciplinary proceedings against the employee is that none of the disciplinary complaints against the employee have been established by the employer on a balance of probabilities. It follows that all the complaints against him in these proceedings are dismissed,” Maritz said in a judgement delivered on Wednesday.

Mulunga, before the news of his dismissal was revealed late night on Thursday, told The Namibian he felt vindicated.

“⁠I knew I did nothing wrong but this is a clear vindication, first from the Anti-Corruption Commission, and now from an independent disciplinary process. Justice has been served,” he said.

The Namibian last month reported that there were attempts to remind the chairperson of the disciplinary hearing to finalise the verdict before the end of June.

Namcor sources believe Maritz bungled the case.

Prior to Mulunga’s dismissal on Thursday, sources described his victory as short lived, since the suspended MD was facing other charges regarding military outfit Enercon, involving deals worth N$53 million.

It is this payment that ultimately ended Mulunga’s nine-year tenure as Namcor’s MD on Thursday, less than 48 hours after Maritz cleared Mulunga of wrongdoing in the N$123 million oil deal transaction.

“The board of directors of Namcor, at its meeting held on 8 August, deliberated on an ongoing case of misconduct relating to the unauthorised asset acquisition by the suspended MD, Mulunga,” said the board in a notice.

THE BOARD MEETING

At the heart of Mulunga’s disciplinary hearing is a board meeting that took place round robin on 19 November 2021.

It was at that meeting that the board alleges that Mulunga paid N$123 million from Namcor to an oil block in Angola without board approval, committing fraud in the process.

Maritz said the board resolution gave Mulunga sweeping powers to ostensibly enter Namcor into business marriages.

“It is beyond cavil from the formulation of the authority conferred on the employee by round robin resolution on 19 November regarding the sale and purchase agreement in respect of blocks 15/06, 18, 31, 23 and 27; the incorporation of Sungara and his appointment as “authorised representative” in terms thereof was done in sweepingly wide and general terms,” he said.

BOARD WITNESS
One of the witnesses on behalf of Namcor is Engelhardt Kongoro, who testified for the board.

“Kongoro testified that he only learned that the US$6,7 million (N$123 million) had been transferred at a meeting two days later, on 19 August 2022,” Maritz recounted in his judgement.

“He [Kongoro] also pointed out that no conditions had been put in place to preclude Sungara from transferring the US$6,7 million to Sonangol until such time as the board had approved the transfer by Namcor, thus putting the funds and the recovery thereof, if need be, at risk.”

Maritz said it is apparent from the various concerns expressed by the board in its minutes, “that its directors were deeply troubled by the commitments made by management”.

He said the board was worried by concerns ranging from the financial risks created by those commitments and payments due to Namcor, and the disproportionality between the equity contribution Namibia’s oil company had made, and the equity to be actually received in consideration for it.

Maritz said other concerns included “the manner in which the joint venture partnership had commenced; the inability of the joint venture partners to pay their share of the equity contribution required, which they described as a ‘shock’ and questioned the credibility thereof”.

Maritz also said the board clarified that Namcor’s management had known about those events (including the transfer of the US$6,7 million) for more than a fortnight and had failed to inform the board during that time.

“The board recorded its “shock” and “discomfort” with the “new [board] update” and protested the “unfair pressure” being brought on it with an additional request “of over N$100 million” (i.e. to finance the obligations committed to without the board’s prior approval),” Maritz said.

SUNGARA MARRIAGE

The judgement details how Namcor found itself in a financial fix due to a series of rushed and unauthorised financial decisions.

The details centre around Namcor’s involvement in the Sungara Energies venture, formed in December 2021 to acquire oil blocks in Angola.

Sungara, which is a collaboration between Namcor, Petrolog Energies and Sequa Petroleum UK, secured rights to several offshore blocks, including Block 15/06 in Angola.

Sungara is registered in England and Wales.

The acquisition of Block 15/06 required an immediate non-refundable payment of N$415 million, with further obligations totaling over N$8 billion.

“As to how this amount could be raised, Kongoro vaguely referred to different options, such as “a bond issue or financing by a consortium of banks and financiers, which loan was going to be backed up by the proceeds from the production of the crude of Block 15/06,” Maritz said.

“Namcor transferred the additional N$123 million to Sungara on the condition that it remains in Sungara’s account in Mauritius until board approval has been obtained,” Mulunga said in a statement given to the disciplinary hearing case.

The Sungara board of directors paid the money over to Sanongol without Mulunga’s approval.

“I requested the other Sungara partners not to transfer the additional N$123 million and therefore, the entire amount sitting at Sungara bank without my prior approval. After various attempts in midweek by me to engage with the Namcor board to seek their approval, they only agreed to meet at 17h00 on the date the deposit was supposed to be paid to Sonangol,” Mulunga said.

Mulunga said the board ended up not approving the additional N$123 million.

“After the board meeting, I realised that they (Sungara) paid the deposit to Sonangol without Namcor’s consent, claiming that the two out of three directors of Sungara made that decision,” he said.

“They told me that Sequa’s deposit has already been paid to Sungara and they were just waiting for the bank confirmation and SWIFT to be sent to us.”

Mulunga said this money was paid back to Namcor last year.

PAYBACK

In September 2022, Namcor sought repayment from Sequa and Petrolog, citing the overpayment. The situation escalated when both partners failed to settle their debts, leading to Sungara declaring Sequa a “defaulting shareholder”.

“Subsequent to this, I have been following up almost on a daily basis to enquire about the arrival of Sequa’s funds to Sungara for almost two weeks,” Mulunga said in the letter submitted as part of the disciplinary hearing.

He added: “The funds did not make it to the Sungara account in Mauritius because the issue was apparently that someone missed the last digit of the IBAN number, so corresponding banks were working together to trace it.”

Sequa said the money would eventually be returned to the payee, who will find another avenue to directly pay into Namcor’s account.

“I have again reiterated to Sequa to make sure that this money is returned to Namcor without fail. I believe that this money will indeed be returned to Namcor,” Mulunga said.

Mulunga said in the unlikely event that it is not returned to Namcor before completion, there was more than one way that Namcor’s risk was mitigated.

Mulunga claimed that everything was done in good faith and to save the transaction and Namcor’s future.

“Not saving this transaction was unthinkable to me as MD of a world-class petroleum organisation,” he said.

Mulunga was cleared of the charges related to the N$123 million payment on 7 August, but was fired a day later on separate charges related to the N$53 million payment from Namcor to military contractor Enercon.

IGNORING CHARGES

The board of directors said Mulunga failed to respond to the charges concerning the N$53 million transaction.

The board said Mulunga was informed of the hearing, scheduled from 18 to 20 January and 25 to 26 January, and 21 to 23 March.

“You were requested to give your consent that the charges be heard together with other charges which were then pending against you and which were set down for continuation of hearing on the above dates,” noted the board in the termination letter.

Mulunga was given three days to plead to the charges but allegedly failed to respond to the notice and charges.

“On 22 January, and because of your failure to respond, Kangueehi and Kavendjii Inc. Legal Practitioners, addressed a letter to your legal practitioners, Jermaine Muchali Attorneys, setting out the procedures which will be followed in respect of the above charges,” noted the board.

“In terms of that letter, you were advised to, if you so choose, state in writing whether or not you are guilty of the charges and if you plead not guilty, to indicate exactly why you plead not guilty,” noted the board.

Mulunga was expected to do this by 2 February.

“Failing to do so, the board would accept that you plead not guilty. You were further advised that if you so elect, you may together with your plea set out all the facts as you consider necessary to be taken into account as mitigating circumstances in the event that you are found guilty on any of all the charges,” added the board.

• This is a developing story